The Lowy Institute's Reports From a Turbulent Decade, our tenth anniversary anthology, is now available in bookshops and online. And with the Pacific Islands Forum starting today in the Marshall Islands, this is a good time to feature an extract from an essay by former Lowy Institute Research Fellow Fergus Hanson.
As Jenny Hayward-Jones mentioned this morning, last year's Forum gained international interest because of then US Secretary of State Hillary Clinton's attendance, which fed 'speculation that the US was anxious about the rise of China's influence in the Pacific'. Jenny has herself played an important role in allaying some of those anxieties, and so did Fergus in this 2009 op-ed:
...China is an erratic and unpredictable donor. Aid flows fluctuate sharply between years, making it extremely hard for tiny island economies to depend on China. It funds projects without any regard to recurring costs, which has left Samoa with a US$13 million Olympic-style swimming pool complex that would be beyond the means of many larger states to maintain.
Debt burdening is another looming problem. Countries like the Cook Islands – population 21,000 – borrowed almost US$10 million from China for sporting facilities. Its deputy prime minister has asked how it could repay the loan, making the sanguine comment, ‘We hope New Zealand will be [able] to assist us with this.’ In 2007, Tonga took out a soft loan with China for the equivalent of 22 per cent of its entire gross domestic product. The secrecy of its program has led to questions over whether China is overpricing the infrastructure it builds as aid, forcing Pacific states to take out larger loans from China than necessary.
Overall, it is not a pretty picture, which is a shame, because the region is in desperate need of well-coordinated and well-implemented development assistance.